Trucking metrics are useful only when the carrier and the benchmark define miles, revenue, trucks, and other inputs consistently; otherwise, apparently small differences can distort costs, productivity, and pricing.
Trucking consultants are often asked to benchmark revenue, cost, and productivity. Metrics are the building blocks of planning and profitability, and small changes in key measures can materially affect company performance.
The industry was becoming increasingly metric-driven, with more benchmarking information available for finance, driver recruiting and retention, maintenance, and operations. To use that information correctly, a carrier must understand how each factor is defined and measured.
Miles, revenue, and trucks are basic inputs to many trucking statistics, but each can be defined in several ways.
Not All Miles Are the Same
Mileage-based metrics frequently use different mileage sources depending on the purpose of the calculation.
Fuel and equipment-maintenance statistics, including tractor maintenance cost per mile and miles per gallon, are usually based on odometer, hub, or engine-control-module miles.
Financial reports may calculate fuel and maintenance cost per mile using dispatch miles. Because dispatch miles are normally lower than odometer, hub, or ECM miles, the financial-report cost per mile will appear higher even when the underlying cost is the same.
Miles used to bill a customer between two points may also differ from miles used to pay the driver for the same movement because the company uses different routing assumptions or mileage programs.
Mileage Definitions Can Change a Bid
A carrier may understand its operating cost and quote a rate using dispatch miles generated by its transportation management or dispatch system.
A shipper, however, may specify a mileage engine such as Rand McNally or PC*Miler, select short or practical miles, or provide its own mileage.
The carrier must understand the difference between the miles used to calculate its cost and the miles the shipper will use for payment. A 3%–5% variance can effectively create a 3%–5% discount if the carrier prices the freight without reconciling the two definitions.
Revenue Also Requires a Definition
Revenue statistics can include or exclude fuel surcharges and accessorial charges.
Fuel surcharge should generally be included when comparing rates among customers or against an industry rate index. When comparing rate trends over a long period, however, the surcharge probably should not be included because fuel-price changes can obscure the underlying linehaul trend.
The appropriate definition depends on the question being answered.
Truck Counts Change Productivity Measures
Truck counts can also vary. A productivity, driver-turnover, or other performance statistic may use:
- Total trucks
- Active trucks
- Staffed trucks
- Available trucks
The result depends on which population is chosen and how the term is defined.
Match the Benchmark Before Drawing a Conclusion
The central lesson is that the components of key performance indicators are not universally defined.
Before comparing company results with industry statistics, a carrier should determine how the benchmark defines its inputs and reproduce those definitions internally. Consistent definitions support more accurate benchmarking and more accurate freight pricing.